Plans for Scotland's first national theatre company have been given the go-ahead.

Finance Minister Andy Kerr has announced details of a £7.5m funding package.

The money will be used over the next three years to appoint an artistic director and small administration staff, who will commission work from the existing theatre community.

The company will work with established theatre groups on works of a Scottish character and is expected to stage its first production in early 2005.

Mr Kerr said it would receive £3.5m in 2004-05 and £4m the following year, with cash coming from a Scottish Executive budget underspend.

'Increase participation'

The minister said: "We believe that culture and the arts have a key role in today's diverse Scotland.

"Our vision is for a Scotland where our cultural life is inclusive and accessible.

"Therefore I am pleased to announce that we will fund the creation of a National Theatre for Scotland, to commission and create work across Scotland."

There has been a long-running campaign for the establishment of a Scottish national theatre company.

Dr Donald Smith, director of the Netherbow Theatre in Edinburgh, had led a working party and then a steering committee on the issue, which published a blueprint plan in 2001.

However, the executive was criticised for failing to invest in the plan.

Reacting to the announcement, Dr Smith said the theatre would act as "an emblem of what the arts as a whole can do for Scotland".

"It's going to widen and increase participation in arts and theatre," he said.

"That's got to be good because it is in the energy of audiences that the future of arts lies."

Work will be commissioned

However, in true dramatic fashion, Mr Kerr was reprimanded by the Scottish Parliament's presiding officer after details of the announcement appeared in the media before being put to MSPs.

George Reid said "significant" statements on matters of policy or budget must go before parliament and he referred to an article in The Scotsman newspaper.

He said: "I judge the contents of The Scotsman today to be significant, and believe the guidance has on this occasion been breached. That is unfortunate."

Scottish National Party MSP Fergus Ewing had complained that details appeared on the radio and in the newspaper.

'Anger and unhappiness'

He said: "I understand that in the statement we are about to hear, there will be an announcement of funding for a National Theatre, although The Scotsman have more information about the details that we do even now."

Mr Kerr said he shared the "anger and unhappiness" of MSPs and he would voice his anger at a later date "with those I suspect are responsible".

He said he had spoken to Culture Minister Frank McAveety and Scottish Executive press officers and had been assured "completely and utterly" that this had not been released by the executive.

"If these theatres have problems surviving while the national theatre goes from strength to strength, that will remain a problem

Jeremy RaisonCitizens Theatre

Speaking ahead of the announcement , the former director of the Federation of Scottish Theatre, Hamish Glen, expressed enthusiasm for the project.

He said: "It would be the creation of what I think will be a radical new version of a national theatre, building on the existing infrastructure, commissioning work from the best Scottish theatre artists and making work of a scale and a standard that otherwise wouldn't be achievable."

Playwright and national theatre campaigner Liz Lochhead said: "My response is the same as when we got a Scottish Parliament, 'Oh God how scary, now it's down to us'.

"It's down to us in the theatre sector to make sure this is a success."

But Jeremy Raison, of the Citizens Theatre in Glasgow, said the new theatre company must not drain existing resources.

He said: "If you can raise the profile of Scottish theatre internationally, that's great. If you can take more work around more of Scotland, that's great.

"It shouldn't be seen, though, as a complete panacea, we still have funding problems here, as do many theatres.

"If these theatres have problems surviving while the national theatre goes from strength to strength, that will remain a problem."

Scottish Arts Council chairman James Boyle said the decision was a dream come true.

He said: "It's going to be about colour and spectacle and glamour. The gobsmack factor will be high."

He said he has received e-mails of support for the project from Scots stars including Dougray Scott and Billy Boyd.